DR SHAWN CUNNINGHAM STIMULATING INNOVATION SYSTEMS BY MOVING FROM INNOVATION TO INNOVATION SYSTEMS
M
ost practitioners working in innovation make a distinction between product, process and business
model innovation. It is important to recognise that there
are fundamental differences in these three approaches in terms of who leads innovation, who enables innovation, and the effects of innovation. A lesser discussed topic that has emerged is the field of innovation systems. Let me briefly summarise the four approaches before going on.
Product innovation Of these three kinds of innovation, product innovation is the most popular for both business people, practitioners and policy makers, with countless incentives, development process and consulting offers aimed to assist business, entrepreneurs and even children to become product innovators. There are many courses, case studies, publications and even self-help systems to assist individuals, entrepreneurs, employees and even children develop new products.
Product innovation is undertaken by existing firms, potential entrepreneurs and inventors. It could be the
result of a breakthrough
discovery, or as the result of tinkering, or a detailed design and engineering process. Successful product innovation also requires good marketing and business skills.
Process and system innovation Seen as slightly more sophisticated and mysterious is the topic of process innovation. International and professional consultancy firms often dominate in this space, and many approaches to improving and optimising internal business and operational processes
30 Management Today | September 2012
exist. This field of consultancy is often driven by larger brand owners and manufacturers that invest in continuously improving their internal processes in order to drive down operating costs. Engineers see this topic as important, as process innovations creates platforms that in turn allows large numbers of product innovation to take place.
Depending on the nature of the process innovation it is often lead by people with either an engineering or business management qualification, and it could either be incremental or radical. In an existing firm these people would need to have some decision-making power and authority. However, even a small firm or a start-up could create an innovative new process.
Business model innovation The third level, business model innovation, is the least discussed. Of the three types of innovation, this is the most risky and also the most financially rewarding kind of innovation. This is where a business would innovate in terms of business models, perhaps by creating a new unit, or perhaps by starting a completely new firm.
Authors like Gary Hamel and others have written excellent books on this topic. In South Africa, business model innovation receives very little attention by both business leaders and the public sector. When a business experiments with its business model, it goes far beyond improving internal systems, or optimising particular systems. It creates new markets, complete hierarchies, customer interfaces, internal processes and then of course new products.
The Innovation Journal
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